Hi all, i am struggling to find how to do the calculation to find the pip value for the Forex pairs.
My account is in euros and my broker has 5 decimals.
For pairs where the base currency is the euro i think it would be:
i.e. EUR/USD = 1.38000
1 pip value= (0.0001/1.38000)*1000 (for a micro lot or 0.01 lots)= 0.072463 euros per pip.
I do not understand why it is 0.0001/1.38000 instead of 0.00001/1.38000 because my broker offers 5 decimals.
Also, can anyone explain me how would be the math for another pair where the euro is not the base currency or even worst, when the euro is not in the pair as in usd/chf?
Thank you very much in advance and sorry for my English.
Hello, darodi
Welcome to the forum.
In every case, a pipvalue is determined by (1) the crosscurrency (not the base currency) in the pair being traded, and (2) by the account currency (in your case, euro).
If you are trading the EUR/USD in a eurodenominated micro account, then the equation you wrote is correct.
You have written: 1 pip = (0.0001/1.38000)*1000
That equation gives us [B]1 pip = €0.072463[/B], which your broker most likely will round down to €0.07
Your equation could be rearranged to read: 1 pip = 0.10 / 1.38000. The numerator is 0.10 because it denotes a pipvalue of $0.10 per pip in a USDdenominated micro account. The denominator is 1.38000 because that is the current EUR/USD exchange rate, which converts the pipvalue to euro.
In the rewritten equation, the numerator is not affected by the number of digits in the quoted exchange rate. For example, suppose the EUR/USD = 1.38123. If your broker quotes prices in 5 decimals, then 1 pip = 0.10/1.38123. If your broker quotes prices in 4 decimals, then 1 pip = 0.10/1.3812 (which would not change the effective pipvalue after rounding down).
Later, I will post a table of pipvalue equations, which you might find to be helpful.
Thank you very much for your help Clint. How about in pairs where there is no eur in the quote?
In any currency pair that you are trading, the pipvalue is determined by B lot size [/B](standard, mini, micro or nano), B the crosscurrency[/B] (also called the quote currency) and B the account currency[/B] (which, in your case, is euro).
In every case (except yenpairs), when the [B]crosscurrency[/B] of the pair being traded and the [B]account currency[/B] are the [B]same[/B], then the pipvalue will be [B]10 units of the account currency per standard lot traded.[/B] These are referred to as [B]fixed pipvalues.[/B] All other pipvalues are [B]floating pipvalues,[/B] so called because they vary with exchange rates.
So, for example, trading the GBP/USD in a $denominated (standard) account, 1 pip = $10. Trading the EUR/GBP in a £denominated (standard) account, 1 pip = £10. And trading the USD/CAD in a C$denominated account, 1 pip = C$10.
Because the yen has a tiny unitvalue compared to most other currencies, a multiplier (100x) is applied to pipvalue calculations for yenpairs. So, for example, trading the GBP/JPY in a ¥denominated (standard) account, 1 pip = ¥1,000. Notice that, in all yenpairs, [B]the JPY is always the crosscurrency, never the base currency.[/B]
Returning to one of your questions — specifically regarding your €denominated account, you asked about [B]pipvalues for pairs which do not involve the EUR.[/B] By international agreement, in all EURpairs, [B]the EUR is always the base currency,[/B] never the crosscurrency. Therefore, it doesn’t matter whether the pair in question involves the EUR or not, because the base currency does not determine the pipvalue. There are [B]no fixed pipvalues in a €denominated account;[/B] in a €denominated account, for every pair — whether it includes the EUR, or not — the pipvalue will float (vary with currency exchange rates).
I think this will give you everything you could possibly want to know about pipvalues:
Table of PipValue Formulas for a EuroDenominated Standard Account
(trading standard lots  100,000 units of base currency)
[B]PAIR TRADED[/B]
EUR/AUD, or any pair of the form XXX/AUD  1 pip = €10 divided by EUR/AUD
EUR/CAD, or any pair of the form XXX/CAD  1 pip = €10 divided by EUR/CAD
EUR/CHF, or any pair of the form XXX/CHF  1 pip = €10 divided by EUR/CHF
EUR/DKK, or any pair of the form XXX/DKK  1 pip = €10 divided by EUR/DKK
EUR/GBP  (see note #4)  1 pip = €10 divided by EUR/GBP
EUR/JPY, or any other yenpair (see note #5) — 1 pip = €1,000 divided by EUR/JPY (also, see note #6)
EUR/NOK, or any pair of the form XXX/NOK  1 pip = €10 divided by EUR/NOK
EUR/NZD, or any pair of the form XXX/NZD  1 pip = €10 divided by EUR/NZD
EUR/SEK, or any pair of the form XXX/SEK  1 pip = €10 divided by EUR/SEK
EUR/USD, or any pair of the form XXX/USD  1 pip = €10 divided by EUR/USD
[B]Notes[/B]
[B]1.[/B] For minilots, divide the pipvalues calculated above by 10.
[B]2.[/B] For microlots, divide the pipvalues calculated above by 100.
[B]3.[/B] For nanolots, divide the pipvalues calculated above by 1,000.
[B]4.[/B] The EUR/GBP is the only GBPpair in which the GBP is the crosscurrency. In all other GBPpairs, the GBP is the base currency.
[B] 5.[/B] All yenpairs have the same pipvalue, because, in all yenpairs, the JPY is always the crosscurrency.
[B]6.[/B] To calculate the pipvalue of a yenpair, we start with €1,000.00 (instead of €10) and divide it by the current price of the EUR/JPY. The difference is because in all yenpairs, one pip is represented by the second decimal place in the price; whereas, in all nonyenpairs, one pip is represented by the fourth decimal place in the price.
Hi Clint,
Thanks for this valuable post above. Currently I’m not yet that experienced in forex and therefore trying to put this info into practice, but still making some mistakes in my calculations I think. Could you provide some guidance?
[B]My setup:[/B]

trading the EUR/USD in a eurodenominated micro account (0.01)

analyzing following trade and trying to calculate the profit of [B]16,10000[/B]:
[B]#[/B]
[B]time[/B]
[B]type[/B]
[B]order[/B]
[B]lotsize[/B]
[B]price[/B]
[B]sl[/B]
[B]tp[/B]
[B]profit[/B]
[B]balance[/B]5
2013.10.11 11:57
buy
2
0,46
1,35648
1,35191
1,35683
0,00000
693,070006
2013.10.11 12:00
t/p
2
0,46
1,35683
1,35191
1,35683
[B]16,10000[/B]
709,17000
[B]My profit in pips?[/B]
Profit, in pips = 1,35683  1,35648 = 0,00035 points or 3,5 pips
[B]How much is each pip worth in euro?[/B]
1 Pipvalue = €10 divided by the price of the EUR/USD at the time the trade was closed divided by 100 for microlots (from the table above)
1 Pipvalue = €10 / 1,35683 / 100 => €0,0737012005925577 per pip, per microlot
[B]How much profit did I earn, in euro, on this trade?[/B]
Profit, in euro = 3,5 pips x €0,0737012005925577 per pip per microlot x 46 microlots (0,46 lots * 100) = [B]€11,8659[/B]
The thing is that [B]€11,8659[/B] is not equal the profit of [B]16,10000[/B] ?
Thanks in advance.
Hello hgroup,
Welcome to this forum. Your math is perfect, except for one small error, which you [I]finessed:[/I] In your calculation of profit, you referred to your position size as 0.46 micro lots (that is, 0,46 micro lots, as you Europeans write it).
Actually, it’s 0.46 standard lots = [U]46 micro lots.[/U] However, somehow when you did the actual calculation, you got the correct result.
Just to make sure we’re both working with the same data, here’s your trade as I understand it (using Americanstyle decimal points, instead of commas):
You traded (LONG) 46 micro lots of EUR/USD, entering at 1.35648 and exiting at 1.35683 for a pipprofit of 3.5 pips.
I think we agree, up to this point, right?
Now, here’s the strange part:
You said that your account is denominated in EUR, but the profit number shown in the box implies that your account is denominated in USD. You can confirm this by the following calculation:
Profit in USD = 3.5 pips x $0.10 per micro lot x 46 micro lots = $16.10
The profit number shown in the box implies that your starting balance was $693.07, and after adding your profit of $16.10, your ending balance was $709.17.
I see only two possible explanations for your dilemma:
[B]Either this is a USDdenominated account, or the profit number shown in the box is wrong.[/B]
Hi Clint,
Thanks for your reply. I provided indeed some incorrect info about the amount of the microlots. I wrote 0,46 but in my excel, I indeed multiplied with 46 and therefore getting the correct result. I also edited my above post to the correct info.
I checked the account details; it’s telling me that it’s a €50k demo account but I’m pretty convinced now that this is a USDdenominated account since your remarks and calculations make perfectly sense. On the other hand; it could maybe also be a problem of my MT4 client because i did a second test which was giving again some unexpected results:
[B]My setup:[/B]

trading the EUR/USD in a usddenominated micro account (0.01)

analyzing following trade and trying to calculate the loss of [B]306,93[/B]:
[B]#[/B]
[B]time[/B]
[B]type[/B]
[B]order[/B]
[B]lotsize[/B]
[B]price[/B]
[B]sl[/B]
[B]tp[/B]
[B]profit[/B]
[B]balance[/B]2
2013.10.08 17:48
buy
1
0,67
1,36056
1,35600
1,36091
0,00000
1000,000003
2013.10.09 09:06
s/l
1
0,67
1,35600
1,36091
1,35683
[B]306,93[/B]
693,07000
[B]My profit in pips?[/B]
Profit, in pips = 1,35600  1,36056 = 0,00456 points or 45,6 pips
[B]How much is each pip worth in dollar?[/B]
1 Pipvalue = $10 / 1 / 100 => $0,10 per pip, per microlot
[B]How much profit did I earn, in dollar, on this trade?[/B]
Profit, in dollar= 45,6 pips x $0,10 per pip per microlot x 67 microlots (0,67 lots * 100) = [B]$305,52000[/B]
The thing is that [B]305,52[/B] is not equal the loss of [B]306,93[/B] ?
Or aim I missing something again?
Thanks in advance.
You took a LONG trade in EUR/USD and lost money. You have correctly indicated your piploss (45.6 pips) and the corresponding dollarloss ($305.52).
I suspect that the other figure you are reporting ($306.93) includes something other than your trade loss; it may be a negative rollover charge.
The first trade you reported (in post #5) was opened and closed within about 3 minutes around midday, so it involved no rollover charge.
The trade you are asking about now (the one in post #7), however, was open for 15 hours 18 minutes, and extended over two calendar days. The rollover charge on [U]long EUR/USD[/U] trades is [U]negative[/U], meaning that you pay the interest differential, rather than earning the interest differential (as you would do on a [U]short EUR/USD[/U] trade).
I’m guessing that the $1.41 in additional “loss” which you can’t account for is actually a negative rollover charge.
In the future, when you have questions like this one, it might be helpful to post a screenshot of your account statement, rather than the handmade table of figures which you have posted here.
Thanks Clint for your advice and guidance.
Very nice and educative however i need 2 more confirmations to be able to fully understand this:

if i have a GBP/JPY or any XXX/JPY pair/s the same principle is applicable like you mentioned for EUR\JPY above; so to calculate pip value for pair GBP/JPY the math i like this: 1 pip = E 1000 divided by the GBP/JPY?
Also your Note 5 says pip value the same for yen pairs then if this is the case the pip value for a GBP/JPY can be easily calculated like this 1 pip = E 1000 divided by the EUR/JPY right ?? 
what if a have 5 lots instead of 1 instead of 10 value i need to used 50 or how to calculate when i have more then 1 lots?
Thanks
mihai
For one standard lot (100,000 units of base currency):
(1) if your account is denominated in EUR, then the pipvalue for any yenpair is: €1000 ÷ EUR/JPY
(2) if your account is denominated in GBP, then the pipvalue for any yenpair is: £1000 ÷ GBP/JPY
(3) if your account is denominated in XXX, then the pipvalue for any yenpair is: X1000 ÷ XXX/JPY
Right. That calculation will give you the pipvalue [B]for one standard lot[/B] of GBP/JPY, EUR/JPY, USD/JPY, or any other yenpair, [B]in a €denominated account.[/B]
The pipvalue for 5 standard lots will simply be [B]5 times[/B] the pipvalue for 1 standard lot.
The pipvalue for 5 minilots will simply be [B]5 times[/B] the pipvalue for 1 minilot.
And so forth.
informative thread, thanks!
Thanks
Ok one more question :7:
What about pip calculation for the same eur denominated account but for commodities and indices like gold and S&P500?
As per MT4 symbol proprieties says Profit calculation mode = CFD but i do not know how to calculate per CFD.
So if is not to much to ask please bring some light on this issue just like you did sometime ago for currencies with some example and the logic behind
BR
Mihai
Nothing nobody knows this ?!
BR
Mihai